Shell, Eni Face Italian Charges Over Nigerian Deal -Update

An Italian judge Wednesday indicted Royal Dutch Shell PLC, the chief executive of the Italian oil-and-gas company Eni SpA and other industry executives on corruption charges connected to a 2011 deal to acquire drilling rights off the coast of Nigeria.

Prosecutors say in court documents that Eni CEO Claudio Descalzi and the other executives at both Shell and Eni knew that most of the $1.3 billion Eni and Shell paid to the Nigerian government to acquire the drilling rights would be distributed as bribes. Prosecutors will argue that Goodluck Jonathan, the Nigerian president at the time of the deal, received part of the kickbacks, according to court documents.

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The trial is due to start March 5 and marks a rare example of senior executives being criminally charged in connection with corruption in the oil sector.

Prosecutors are expected to delve into the operations of the two companies and more widely into an industry that often operates in countries where graft is pervasive like Nigeria.

Other executives indicted include Eni's former chief executive Paolo Scaroni, Eni's CEO at the time of the deal, and Malcolm Brinded, Shell's global exploration and production chief at the time of the deal. Mr. Brinded has since left Shell.

Eni's board of directors said it had "full confidence" that Mr. Descalzi wasn't involved in illegal conduct and "reaffirmed its confidence that the company wasn't involved in alleged corrupt activities." Eni said it ordered an independent investigation that looked into the matter that gave it confidence in its executives.

"Eni expresses its full confidence in the judicial process and that the trial will ascertain and confirm the correctness and integrity of its conduct," the company said.

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Shell said it was "disappointed" by the indictment, but that it believes a trial will show there is no case against the company or its former employees. "There is no place for bribery or corruption in our company."

Mr. Brinded said: "I have done nothing wrong and believe that will become clear in any legal proceedings. I stand by my view that there is absolutely no basis for the charges against me."

Write to Eric Sylvers at eric.sylvers@wsj.com and Sarah Kent at sarah.kent@wsj.com

Royal Dutch Shell PLC, the chief executive of state-backed Italian energy company Eni SpA and other industry executives must stand trial on corruption charges connected to a 2011 Nigerian oil deal, an Italian judge ruled Wednesday.

The prosecution marks a rare case in which top oil executives could face jail time for corruption allegations.

Prosecutors say in court documents that Eni CEO Claudio Descalzi and the other executives at both Shell and Eni knew most of the $1.3 billion the companies paid to the Nigerian government to acquire the drilling rights would be distributed as bribes. Prosecutors say Goodluck Jonathan, the Nigerian president at the time of the deal, received part of the kickbacks.

Mr. Jonathan didn't respond to a request for comment. He has previously denied being involved in any corruption.

The trial is due to start March 5 and represents a significant development in one of the oil industry's biggest corruption scandals.

Prosecutors are expected to delve into the operations of the two companies and more widely into an industry that often operates in countries where graft is pervasive like Nigeria. The global oil industry has long faced charges of corruption though trials have rarely reached into the very upper echelons of management of giants like Shell and Eni.

Other executives indicted include Paolo Scaroni, Eni's CEO at the time of the deal, and Malcolm Brinded, Shell's global exploration and production chief at the time of the deal. Mr. Descalzi was Eni's head of exploration and production when the deal was done.

Eni's board of directors said it had "full confidence" that Mr. Descalzi wasn't involved in illegal conduct and "reaffirmed its confidence that the company wasn't involved in alleged corrupt activities." Eni said it reached these conclusions after several independent investigations into the matter.

"We aren't happy that this is going to trail, but now there will be the judicial process and the company and Descalzi will have the opportunity to defend themselves," Eni Chairwoman Emma Marcegaglia said in an interview.

Shell said it was "disappointed" by the indictment, but that it believes a trial will show there is no case against the company or its former employees. "There is no place for bribery or corruption in our company."

Mr. Scaroni, who is no longer at Eni, declined to comment. In the past he has denied any wrongdoing.

Mr. Brinded, who has since left Shell, said through a spokesman: "I have done nothing wrong and believe that will become clear in any legal proceedings."

The trial is likely to last about 18 months. The decision can be appealed twice meaning five years or more can pass before a definitive verdict.

Shell shares traded down 0.7% and Eni was down 0.4%, while other major oil companies traded somewhat higher Wednesday.

The charges revolve around a giant oil block off Nigeria's Atlantic coast known as OPL 245, which Shell has pursued for nearly two decades. Long the dominant oil company in Nigeria, the British-Dutch oil giant spent years in legal battles with successive Nigerian governments over the bloc's ownership.

Write to Eric Sylvers at eric.sylvers@wsj.com and Sarah Kent at sarah.kent@wsj.com